After coming within sight of Monday’s highs on Tuesday the USD/CAD has reversed lower leaving the currency pair in a speculatively dangerous trading landscape.
The USD/CAD is trading near the 1.33800 ratio as of this writing in conditions that may be creating speculative questions regarding short-term trends for technical traders. After a solid rise on Friday and Monday and flirting with the 1.34750 mark, yesterday’s trading ‘only’ achieved a high of around 1.34690 before starting to reverse lower. As of this morning, yesterday’s selloff has created an intriguing price that is seemingly finding it hard to climb back above 1.34000 for the moment.
Reaction Higher was Violent but the USD/CAD didn’t Break Intriguing Resistance
While the movement higher generated in the USD/CAD starting on Friday after the U.S Non-Farm Employment Change numbers startled financial houses and created a bullish surge, the move higher has not broken through important mid-term resistance. On the 19th of January the USD/CAD was trading above the 1.35200 level, on the 20th of January a high of 1.34975 was touched, and on the 31st the currency pair moved to a high of 1.34720 – showing an incremental bearish move lower even as highs were still being challenged.
The USD/CAD certainly showed buying strength this past Friday, this Monday, and even yesterday, but it seemingly continues to ignite reversals lower. What is interesting about the price of the USD/CAD at the time of this writing is that the Forex pair is again challenging values seen on Friday. It has moved below Monday’s lows. If the USD/CAD can continue to sustain a value below 1.33900 this may be a bearish signal regarding behavioral sentiment.
Short-Term Outlook likely to Produce Choppiness for USD/CAD
- Day traders may face a difficult task today as the USD/CAD fights lower and challenges important short-term technical support. Financial houses remain nervous regarding U.S. central bank interest rate policy and this will continue to spark choppy conditions.
- If the USD/CAD were to see sustained trading below the 1.33800 mark this could prove intriguing. However, in the short term, the 1.33800 may prove to be a lightning rod in which support and resistance levels with narrow targets are fought over as momentum is battled.
Traders should use caution with the USD/CAD in the near term. On Friday Canada will release its employment statistics which could make conditions momentarily nervous too. However, the ability to stay within sight of the bearish trend which has been displayed over the past month of trading still may intrigue traders.
In the meantime, speculators may want to use short-term price ranges that have nearby price targets as support and resistance are fought over. If the 1.33725 to 1.33950 range remains solid, this could prove to be a betting landscape that day traders may find an opportunity to take advantage of while placing their bets.
Canadian Dollar Short-Term Outlook:
Current Resistance: 1.33975
Current Support: 1.33725
High Target: 1.34490
Low Target: 1.33510